BHP Billiton earmarks US shale assets for sale and slashes net debt

Oliver Gill
Follow Oliver
BHP Billiton Announces Record Financial Results
BHP Billiton said it had a number of interested buyers in its non-core assets (Source: Getty)

Global mining behemoth BHP Billiton has pleased shareholders by committing to a US shale exit and slashing net debt.

Annual underlying profits surged to $6.7bn (£5.2bn), the Australian firm announced overnight. Net debt fell from $16.3bn to $10bn.

Markets chose to focus on the debt and strategic announcements rather than the fact profits were below expectations of $7.4bn. A tripled dividend of 43 cents per share also missed analyst targets.

Shares were up 3.19 per cent on the London Stock Exchange by early afternoon.

“Net debt looks very impressive… so the cash looks like it was applied to deleveraging [reducing debt] versus extra dividends,” Shaw and Partners analyst Peter O’Connor told Reuters.

Read more: Mining giant BHP Billiton expected to unearth an increase in revenue

BHP has been under pressure from shareholders, such as activist Elliott, to dump its US shale operations.

The firm said it was actively pursuing options to sell non-core businesses.

“We certainly have plenty of people interested,” said chief executive Andrew Mackenzie. His preference is to sell divisions earmarked for sale on a job-lot basis rather than in one fell swoop.

“Our determination to exit means that we have other ways to exit that do not necessarily depend on… a competitive set of willing buyers.”

Tribeca was another fund manager clamouring for a US shale exit. It welcomed the news that BHP was now calling such operations non-core.

Chairman Jac Nasser, who retires later this year, recently conceded the firm’s $20bn investment into US shale was a mistake in hindsight.

Read more: Activist investor Elliott raises its stake in BHP Billiton

Related articles